n ths day and age micro, small and medium-sized businesses (MSME) occupy a very important position, considered as a "job creation machine", a driving force for growth of every countries’s economy, especially in emerging markets. More clearly, because of small and medium scale, micro, small and medium enterprises can promptly adapt to changes of the actual situation and thus help the nation's economy to better respond to changes. However, due to its small and medium scale, small and medium enterprises face many disadvantages and difficulties in competing with large enterprises and corporations. This can be clearly seen in retail marketplace which is famous for B2B & B2C model, where small retail has no chance with giant brand. An illustration of this is in Ecommerce industry, where you can see many big suppliers from China selling super cheap stuffs compared with products from Western. Therefore, national governments often have policies in order to support these micro, small and medium enterprises with the purpose of creating better conditions and chances for these businesses, hereby, MSMEs will be able to develop and contribute more to the goal of socio-economic development of the nation. However, there are still existing difficulties such as resource to evaluate MSMEs’s credibility, transparency of the rating. Those are also the ideas for Tokoin project to be formedmed.
Difficues In Business Activities Of MSMEMSMEs
irstlet’s find out what are difficulties MSMEs usually face when operating their business. Because of the low capital required to operate, small and medium enterprises are limited in competitiveness. Due to low financial potential, MSMEs lack the resources to implement big business ideas, large investment projects and good funding in the long run. Due to limited capital, MSMEs often find it difficult to invest in research, design and improvement of technology, purchase and modern technology equipment, which require large capital sources. Besides, it also leads to limited in training and improving skills of employees, thereby, affecting labor productivity, product quality and competitiveness of company in the market.
Micro, small and medium-sized enterprises are more unfavorable than large enterprises in establishing and expanding cooperation with economic units like financial institutions (banks, funds) and in relationships with suppliers, authorities or press. The main reason is that the credibility of company in financial institution’s document. On the other hand, MSMEs are usually not funded well so that there is zero effort in their marketing activities.
What is more, the difficulty (often due to the high cost) of obtaining information about borrowers in the financial market is the reason that lenders are often reclutant to give money to certain borrowers. The lack of information about potential customers, raising interest rates has attracted borrowers to take risks to participate in the market, reducing the profitability of lenders. In this context, small businesses are often the first subjects to be restricted from accessing credit market.
With all the reasons mentioned above, Tokoin was developed to provide a blockchain-based platform that provides digital business identity and reputation of MSMEs as an acceptable credibility scoring for merchants and financial institutions. Additionally, Tokoin provides a platform for building useful partnerships that will take you to the engaging ecosystem consisting of lucrative company profiles for company development. As mentioned above, Tokoin project uses blockchain technology to develop its platform. The use of blockchain technology can help solving common challenges in business assessment such as minimize the use of human resources, increase the accuracy of information, and guarantee the transparency of data. In addition, blockchain technology also makes the transfer of data on Tokoin platform become faster and more secure.
How Tokoin Solve Financial Inclusion Barriers
As indicated earlier, because of their unique characteristics, micro, small and medium enterprises often meet difficulty accessing financial inclusion. In the first place, Tokoin platform will help MSMEs to build their business profile as digital identity and earn reputation, which is very hard for them to earn in traditional market. Furthermore, this also helps to reduce cost and resource to obtain business’s information. In the second place, only MSMEs that meet the credit conditions of banks can borrow preferential loan, not all enterprises can use this banking service. On the one hand, banks usually prefer large enterprises who usually have solid collateral and transparent business profile. On the other hand, most of MSMEs have unorganized operation, lack of specific plans and strategies, low risk tolerance, unable to cope with macroeconomic fluctuations. As a result, all of these things badly affect the result of business’s production as well as the effectiveness of loan use and ability to repay bank debts. In particular, the financial capacity of many MSMEs is restricted, financial information is not transparent, and they also do not have collaterals. These are the main reasons affecting the access to bank credit of many MSMEs. With Tokoin platform, this will not be a financial inclusion barrier of MSMEs anymore thanks to digital identity feature of Tokoin platform. More clearly, digital identity is a credit scoring system for businesses meets all the standard for applying company loans in real market. To be more precise, MSMEs have to provide all activity of transaction information to gain their reputation and acts like a data provider for Tokoin platform. Tokoin platform, of course, will use their state-of-the-art technology in order to scan and re-check all the provided data of MSMEs. Consequently, if businesses pass Tokoin’s screening process, they will be able to create more funding opportunity and scale up their business by establishing partnership through Tokoin dApp. More importantly, Tokoin platform will be available on booth desktop and mobile app making it can be used anytime and anywhere by anybody.
As a project with state-of-the-art tech and dedicated team, no surprisingly that many other enterprises and projects in booth crypto and non-crypto comes to establish partnership with Tokoin recently such as Pasarpolis and Sahabat UMKM in Indonesia, Tomochain and Infinito. Nevertheless, above all, Indonesia government already partnered with the project in the MSME sector as well. This shows a huge potential of massive adoption of Tokoin blockchain technology in MSME field of Indonesia in the future.
o suconvenience that Tokoin brings to MSMEs in gaining reputation and finding funding resources is what makes this amazing start-up different from the other blockchain projects. Specifically, digital identity plays a key role in Tokoin platform. In fact, due to the its great feature, MSMEs will not worry about the rejection of financial institution and banks anymore. In like manner, financial institutions can rest assured of who they decide to lend money thanks to the transparency of Tokoin’s blockchain technology. With Tokoin platform, the gap between high-income (top of the financial pyramid) and low-income individuals (bottom of the financial pyramid) is narrower than ever.
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Note: This is not financial advice, please Do Your Own Research before taking any action.